Sydney has been named the second most unaffordable housing market in the world according to new research.
The latest Demographia International Housing Affordability report showed Sydney was second only to Hong Kong as the most unaffordable city, with the report ranking 92 markets in eight nations.
Australia’s largest cities of Sydney, Melbourne, Brisbane, Perth and Adelaide were all classified as “severely unaffordable”, meaning houses were more than five times the median income. All five housing markets have been considered severely unaffordable since the early 2000s.
Melbourne ranked the fifth worst city for affordability while Adelaide was the 13th most costly place to buy a home.
The report said Australian markets had a median price to income multiple of eight, up from 6.9 in 2019, representing an increase of 1.1 years of median household income.
Sydney affordability has plummeted in the past two decades, with prices accelerating since the start of the pandemic.
“Sydney has the least affordable market, with a median multiple of 15.3, the second least affordable market internationally,” the report said.
“No market except for Hong Kong has reached this level of unaffordability in the 18 years of reports.
“Since before the pandemic, Sydney median prices have risen 4.3 years of median household income.
“This two year increase alone is nearly equal to the 4.5 years of income required to buy the median priced Sydney house in 1986.”
With a price to income multiple of 12.1, Melbourne is the 88th least affordable market while Perth is the most affordable market in Australia, yet has a severely affordable multiple of 7.1 and is the 73rd (of 92) least affordable market.
The level of affordability of worldwide housing markets has fallen dramatically since the onset of the pandemic, with the number of severely unaffordable markets rising 60 per cent in 2021 compared to 2019.
The report notes declining housing affordability is driving higher costs of living that threaten the future of the middle-class.
The report was compiled by The Urban Reform Institute and the Frontier Centre for Public Policy and examined the affordability of 92 housing markets around the world based on house prices and median income levels.
